Doing business in Vietnam


 

 

This article demonstrates many interesting views of Vietnamese people from a foreign businessman’s perspective. Some of them are true!!! It was removed from the online site long time ago but still helpful

 

Learning more about the people and how to choose your distributors

WITTAYA SUPATANAKUL

In the second of a three-part series, Bangkok Bank adviser Wittaya Supatanakul outlines more issues investors in Vietnam need to be aware of before making their investment decisions.In my first article last week I highlighted two important elements investors seeking to invest in Vietnam should take into consideration:

– Patenting your product before it becomes a local brand.

– Understanding the culture and traditions of the Vietnamese, who were under the Chinese rule for more than 1,120 years and still think like the Chinese.

Today we’ll take a look at the value of being patient and understanding the Vietnamese people, and then move on to some of the details of marketing and distributing your products.

The value of patience Despite what you may have heard, investing in Vietnam or anywhere else is never easy. You must be patient and keep calm since many problems tend to crop up along the way, catching you off guard. Given the language barrier, the communication gap or misunderstanding is not uncommon.

People drink coffee at a street-side coffee shop in Hanoi. By taking the time to learn more about the Vietnamese, one can avoid many common mistakes. — BLOOMBERG NEWS

Vietnamese, like Chinese – and Thais for that matter – tend to do whatever it takes to save face. They will always say “yes” whenever they are asked or assigned to do something regardless of whether they could do it or not. Also, they will not ask any question when facing problems, convinced they could solve them on their own and fearing being seen as incompetent.

Unless you understand and are prepared for this, you could end up being disappointed. Close monitoring might help prevent or mitigate most of the damage that may otherwise cost your business.

Vietnamese are very self-assertive. Sometimes, they refuse to ask although they do not understand. Worse still, they may take the liberty of making a decision for you without bothering to ask you first.

For instance, you ask a housekeeper for a cup of hot coffee with milk but get black coffee instead. When you ask her whether she understands what you have ordered, she would say she does, but then explain that she serves you the black coffee because it smells and tastes better. Besides, she reckons that a regular coffee drinker must take only black coffee.

Fortunately, by adjusting our working style and monitoring their performances more closely, we could avoid most of the damage. Make a mental note to give a very clear order that leaves no room for misunderstanding or deviation. More importantly, we have to explain to them the importance of following the order strictly.

Vietnamese are diligent, inquisitive, and fast learners. However, they are reluctant to transfer their knowledge to others, thinking that since they learn most by themselves, it is not their duty to teach others.

With their records of victory in wars with China, France and the United States, Vietnamese are fiercely proud of themselves. Dignity is highly valued, and they will not allow anyone to humiliate them, much less foreigners.

In one incident, a South Korean employer of a footwear plant slapped one of his Vietnamese employees in the face with a newly made shoe while on an inspection tour because the employee paid little attention to the job at hand.

As could be expected, his action led to a strike at the factory. The Korean employer ended up being deported in 24 hours for humiliating a Vietnamese.

A proper way to manage Vietnamese staff is to deal with them individually and in private, and never humiliate them in front of others.

You can also opt to manage them through the ranks, by telling their supervisors, preferably of the same nationality, to reprimand or warn the employees who have been out of line. A staff tends to accept a reprimand much more gracefully coming from a compatriot.

As a rule, Vietnamese are persevering and have a knack for business and calculation. On the other hand, long years under socialist rule have left them lacking in terms of service mind.

This reminds me of my experience in China. When I shopped at a department store there not so long ago, the sales staff were not willing to serve me for lack of any incentive even though I bought a lot of things. Since they receive the same monthly salary no matter how hard they work, why bother?

In Vietnam, things are not much different. Don’t expect to hear “thank you” from staff when you give them tips in places such as massage service centres.

Therefore, if your businesses are service-oriented such as hotels or restaurants, make it your priority to train local staff and ensure they have some sense of hospitality.

But in the wake of market liberalisation, Vietnamese are a natural when it comes to trading business. They are tolerant and calm, and have a good memory.

We bought shampoo from a Vietnamese grocer only a few times. Before long, he could remember the brand of shampoo that we used and didn’t seem to mind that we bargained hard.

Also, do not expect favours from the Vietnamese, particularly when you deal with farm products. If you give a Vietnamese some seeds and teach him how to plant them, don’t bank on yourself being the first that comes to his mind when the time is ripe for the plants. Or if you are a regular customer, do not expect you will get any privileges over others. Remember, whoever offers the best price wins the deal.

Choosing a distributor Moving on to marketing and distributing products in Vietnam, it is important that you do not rush to name a sole distributor. When you distribute products in Vietnam, you will often meet an importer who offer to be a sole distributor. But before picking up that pen, you must understand the geography of the country first.

Vietnam occupies a long and narrow stretch of 1,650 kilometres from North to South. Many roads are narrow and bustling with motorcycles, bicycles, and livestock. Vehicle speeds are strictly limited. Because of these factors, logistic costs are very high.

More importantly, people in the northern and southern regions do not always get along well with each other. For instance, people in the South will not co-operate with strangers from the North and vice versa.

People in the South think they are more modern or civilised than those in the North while people in the North think they are smarter than those in the South because they won the civil war.

As well, consumption habits and tastes are different. People in the South have more purchasing power and spend more on luxury products while those in the North are more frugal.

More importantly, do not expect your trading partners in Vietnam to always be effective or to keep whatever they promise to do, particularly sales targets. Most are not so enthusiastic once they are named your sole distributors.

When this happens, you may not be able to expand the market. Worse still, you have to wait until their contracts expire or pay them a penalty to buy back those rights.

It’s wiser, therefore, to name three distributors for the North, Central and South regions, or at least two for the North and South.

Next week we will examine pricing strategy, procurement, trading and labour issues.

Wittaya Supatanakul was the general manager for Bangkok Bank’s Ho Chi Minh City branch before becoming the adviser on the bank’s Vietnam strategy.

One thought on “Doing business in Vietnam

  1. Nearly exploded while reading it.

    There are many things obvious to us that turn out to be “stategic” to foreigners.

    The perspective may annoy a little bit; but it’s worth rethinking, isn’t it?

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s